by Mahesh Kalbhor | Mar 23, 2025 | Weekly Update
Why Do Market Crashes Keep Bottoming in March?
If you’ve been watching the stock market over the past few decades, you may have noticed something oddly specific: when things go bad, they tend to hit rock bottom in March.
Let’s take a look:
Major Market Crashes & Their Bottoms:
• 📉 2000 crash (Dot-com Bubble): Bottomed in March
• 🏦 2008 crash (Global Financial Crisis): Bottomed in March
• ⚙️ 2018 crash (Tech selloff): Bottomed in March
• 🦠 2020 crash (COVID-19 pandemic): Bottomed in March
• ❌ 2022 crash: Did NOT bottom in March. It bottomed in Oct.
Takeaway: 80% of recent crashes bottomed in March.
⸻
🤔 So… What’s With March?
There isn’t a single reason, but here are a few strong theories:
1. 💸 End of Tax-Loss Selling
Investors often sell losing positions in December for tax benefits. That downward pressure lingers into Q1, and by March, much of the selling is flushed out.
2. 🧾 Fresh Capital Inflows
New fiscal years, bonuses, and retirement account contributions often kick in around March, giving the market a boost.
3. 🏛️ Fed Policy Announcements
The Federal Reserve tends to make major policy updates in Q1, often calming fears or injecting stimulus after a rough winter.
4. 🌱 Seasonality & Sentiment
After a gloomy Q4 and volatile Q1, investor optimism tends to return in the spring — what some call the “spring rally.”
📈 Market Update: Navigating a Choppy Rally
Over the past week, the stock market—as represented by the $SPX—has made some effort to rally. We’ve seen a couple of strong days, yet resistance at or just above 5700 has repeatedly pushed back these gains. Typically, oversold rallies are expected to reach, or even slightly surpass, their declining 20-day moving averages. In our current scenario, that moving average sits at 5760 and is falling rapidly. Rather than the market surging to meet this level, it now appears that the moving average will drop to align with $SPX.
🔍 Key Levels to Watch:
Resistance:
🚧 The 5700 mark remains a formidable barrier.
Support:
🛡️ There is tentative support in the 5500-5540 zone—the area where daily lows were recorded a week ago. If this fails, we might see support near 5400, a level that provided relief last September.
📊 Rally Dynamics and Technical Signals:
Put-Call Ratios:
📉 Equity-only put-call ratios continue to send sell signals. Even on rally days, these ratios are rising—the weighted ratio, in particular, has reached levels last observed during the 10% market correction in October 2023. The standard ratio is also on an upward trend, though not as extreme yet. These metrics won’t flip to buy signals until they peak and begin to decline.
Market Breadth:
⚖️ Breadth has been volatile, with large net plus or minus figures appearing almost daily. While breadth oscillators have moved into buy territory (reflecting recovery from oversold conditions), this optimism hasn’t translated into consistent upward momentum.
Implied Volatility ($VIX):
🔄 The $VIX spiked sharply in early March and has since pulled back, creating a “spike peak” buy signal on March 12th that will remain valid for 22 trading days unless $VIX closes above its recent peak of 29.57. Concurrently, a $VIX sell signal established in late February persists, given that both $VIX and its 20-day moving average are above the 200-day moving average (just above 17).
🤔 Final Thoughts:
In summary, the market appears oversold and is making a violent effort to rally, yet the momentum is not gaining significant traction. In a typical bear market environment, these oversold conditions are eventually worked off, with sell signals resuming their influence.
For now, Staying informed and agile is key in navigating these choppy waters.
#MarketTrends #SPX #InvestingInsights #TechnicalAnalysis #TradingStrategies
by Mahesh Kalbhor | Feb 20, 2025 | Weekly Update
💼 Market Update: Fed Policy & QE 💰
Jerome Powell recently stated that the Fed won’t start QE until rates drop to 0% 🚫💵. Here’s the lowdown:
📈 Interest Rates 101:
• The Fed sets the short-term (overnight) lending rate, which influences all long-term rates (1yr, 2yr, 10yr) 🔄.
• When inflation rises, rates are increased to slow borrowing and cool the money supply 🔥⬆️. Conversely, lower rates boost borrowing and stimulate the economy 💡⬇️.
• Post-COVID, rates have climbed from 0% to 4.5%, slowing growth and affecting asset prices 📉🏠.
🖨️ Quantitative Easing (QE):
• QE is essentially “money printing” — a tool to inject cash into the economy when rate cuts aren’t enough 💵🖨️.
• Historically, QE has been a fallback during crises (think 2019 liquidity crunch & post-2021 inflation control) 🕰️➡️💸.
• Despite current denials, past trends indicate that when conditions worsen, similar measures might return, even under a different name 🔄.
🔮 Looking Ahead:
While Powell’s stance is clear for now, history suggests the Fed’s money-printing tool remains a constant backup in turbulent times. Stay tuned for how these policies evolve! 🚀
#FederalReserve #JeromePowell #QE #InterestRates #MonetaryPolicy #Economy #FinanceInsights
by Mahesh Kalbhor | Feb 1, 2025 | Weekly Update
Breakout to New Highs?
A week ago, $SPX hit new all-time highs for two consecutive days. While the breakout wasn’t overwhelmingly strong, it signaled that the market was testing new waters.
⚠️ Market Panic Over DeepSeek AI
On Monday, January 27th, a sudden panic over a Chinese AI platform DeepSeek sent shockwaves through the market. Major averages and AI-related stocks took a beating—even though many unrelated stocks brushed off the news. Given that $SPX carries heavy weightings in AI stocks, the index slipped back into its trading range. This pullback raises the possibility of a false breakout. Of course, if $SPX rockets to new highs soon, we might all forget about this brief dip.
🔍 Technical Highlights
Resistance & Support
Resistance: $SPX now faces resistance at 6100.
Support: The lower end of the trading range lies between 5760 and 5870, where declines have historically halted over the past couple of months.
📊 Market Breadth
Although the market breadth wasn’t exceptionally strong this week—mainly due to Monday’s steep selloff—it surprisingly held up during the AI decline. Now that breadth is turning more positive again, the oscillators continue to display buy signals that emerged in mid-January.
🔥 $VIX Activity
The $VIX spiked during Monday’s AI selloff and then quickly retreated. This movement created another “spike peak” buy signal
💡 Our Current Strategy
At this time, we’re not holding a “core” position in $SPX since it’s still within its trading range. Instead, we’re trading individual signals as they occur. A crucial tip for options traders: remember to roll options that become deeply in-the-money to effectively manage risk.
🤔 In Summary
Market dynamics are in flux, and while short-term volatility can be unsettling, these signals provide valuable insights. We’re keeping our strategy agile—cautiously observing the market and executing trades based on clear technical signals.
#SPX #MarketAnalysis #TradingInsights #Investing #OptionsTrading #MarketSignals #Finance
by Mahesh Kalbhor | Sep 29, 2024 | Weekly Update
**🚀 The $SPX Soars to New All-Time Highs!**
After breaking out to new highs at the end of last week, the $SPX has shown impressive strength with only a minor pullback this week—a successful retest of the 5670 breakout level. 📈 We’re witnessing new all-time highs daily, both intraday and at closing, confirming this bullish momentum with strong price action.
**Key Support & Resistance Levels:**
– **Support at 5670:** This level now acts as solid support. Some might argue that support extends down to 5560, but a move below 5670 could be a warning sign. A decline below 5560 (which I don’t anticipate anytime soon) would suggest a bearish reversal and imply that the recent breakout was a false one.
– **Upside Potential:** With $SPX trading at uncharted highs, traditional resistance levels are absent. We’re using the +4Σ “modified Bollinger Band” (mBB) as a target, currently at 5810 and gradually rising.
**Market Indicators to Watch:**
– **Equity-Only Put-Call Ratios:** These ratios have been flirting with sell signals but haven’t confirmed them. The standard ratio hit a new relative low recently, keeping it on a buy signal. The weighted ratio is moving sideways—technically a sell signal, but not actionable unless it starts to rise swiftly.
– **Market Breadth:** Breadth has been reasonably good, with both breadth oscillators remaining on buy signals. They’re in overbought territory, but that’s acceptable when $SPX is breaking out to new highs.
– **$VIX Signals:** The $VIX is giving mixed signals. On one hand, the “spike peak” buy signal from September 9th is still in play and has been profitable. On the other hand, the trend of the $VIX sell signal persists since it hasn’t fallen below its 200-day Moving Average (currently at 14.90 and rising). The $VIX staying above 15 keeps this sell signal active.
**Conclusion:**
The majority of our indicators are bullish, and with $SPX confirming its upside breakout, we’re maintaining a **core bullish position**. We’ll continue to monitor for any confirmed signals and will take partial profits on positions that are deeply in-the-money.
**Stay informed and let’s navigate these markets together!**
#StockMarket #Investing #SPX #MarketAnalysis #BullishTrends
by Mahesh Kalbhor | Sep 14, 2024 | Weekly Update
**$SPX Update: Mixed Signals as Market Trades Within a Broad Range**
Just a week ago, the outlook for the $SPX appeared bleak. The index had broken down from its trading range of 5560-5650 and swiftly dropped to the 5400 level, signaling bearish momentum. However, following this plunge, an oversold rally kicked in. By mid-week, $SPX was once again testing the 5400 support level. Despite the renewed pressure, buyers came in strong at this critical point, triggering a sharp 230-point rally in just two trading days.
With this rapid recovery, $SPX has now returned to the 5560-5650 trading range, where it hovered for more than two weeks during the latter half of August. This leaves the market at a crossroads, with resistance standing firm at the top of the range (5650) and just above it at the all-time high of 5670. On the flip side, the 5400 level has demonstrated its strength as solid support, having held up twice during recent sell-offs. Another crucial level to watch is 5370 — a close below this point could spell significant trouble for the market.
At the end of the day, the $SPX remains stuck within a fairly wide trading range, with strong support at 5400 and formidable resistance near 5650.
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### **A Closer Look at Market Indicators: A Mixed Bag**
As is often the case when the market is trading in a range, our technical indicators present a mixed picture. Despite the significant rally over the past four days, some bearish signals persist, creating a conflicting view for traders.
#### **Put-Call Ratios Remain Bullish**
The equity-only put-call ratios are still signaling a buy, as they continue to decline despite the recent sell-off in stocks. This pattern is largely driven by two factors:
1. **Significant Numbers Rolling Off the Moving Averages:** Larger values are dropping off the 21-day moving average, which supports a more positive outlook.
2. **Lack of Heavy Put Buying:** Interestingly, put buying was relatively muted during the recent market pullback, suggesting that traders weren’t aggressively hedging against further declines.
#### **Market Breadth Shows a Reversal**
Breadth indicators, which measure the number of advancing versus declining stocks, have swung from extremely negative to extremely positive in a very short period of time. This rapid shift has not only erased previous sell signals but also produced new buy signals. Such quick reversals in breadth are indicative of the volatility and uncertainty currently gripping the market.
#### **$VIX Indicators Send Conflicting Signals**
The $VIX, often referred to as the “fear gauge,” is presenting conflicting signals, which further complicates the market outlook:
– **$VIX “Spike Peak” Buy Signal:** A buy signal was triggered on September 5th, suggesting that volatility may decrease in the near term, which could be bullish for equities.
– **Upward $VIX Trend:** Despite the buy signal, the overall trend of the $VIX remains upward, signaling ongoing uncertainty and serving as a sell signal for stocks.
It’s somewhat fitting that these contradictory $VIX signals are playing out while $SPX is stuck in this wide trading range, as the market appears uncertain and directionless for the time being.
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### **Trading Strategy: Stay Flexible**
In conclusion, the market continues to operate within a broad trading range of 5400 to 5650, with mixed signals from technical indicators. The $SPX has shown strength on the back of its recent rally, but resistance looms at the upper end of the range, and the support levels, though strong, are not immune to pressure.
Given this uncertainty, our approach will be to:
– **Trade Confirmed Signals:** Focus on signals that have clear and strong confirmation before taking positions.
– **Roll Deeply In-The-Money Options:** As part of our risk management strategy, we will roll options that are deeply in-the-money to lock in profits or mitigate losses.
In such a volatile environment, flexibility is key. We will continue to monitor the critical support and resistance levels, as well as any shifts in the technical indicators, to navigate the market’s ups and downs with a steady hand.
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*Disclaimer: This post is for informational purposes only and should not be construed as financial advice. Always do your own research or consult with a professional before making trading decisions.*
